How You Can Gain a Competitive Advantage with Business Intelligence

Business intelligence can be the difference between being an average-performing company and a superior-performing organization. Your company can gain a competitive advantage by using business intelligence to align your strategic objectives with line-of-business initiatives, according to a report by UBM Tech in 2008. These initiatives begin with customer and competitor intelligence.

Business intelligence gives your company the information you need to understand changes in the market, competitors, regulatory and other legal issues. The better the information you have and understand, the more able you are to utilize your human and financial resources. The quality of your business intelligence is dependent upon your company’s ability to manage information.

How to Calculate Your Business Intelligence ROI

There are several ways to evaluate the cost versus the benefit for business intelligence projects.
These ways include the internal rate of return (IRR), net present value (NPV), payback period and return on investment (ROI). The most commonly used method is return on investment, according to Information Management.

Your ROI gives you a financial measure that quantifies the financial benefits over the costs of a BI project. You calculate the measure by projecting the discounted cash flow derived from the savings of the project and divide it by the initial investment you make. For example if your discounted savings over three years is $500,000 and you invest $750,000, then your ROI is 150%. Nonetheless, for ROI to be meaningful, you must have support for your business intelligence projects throughout your organization so you see it through.

Customer Intelligence

Customer intelligence, also known as customer analytics or customer insight, is integral not only for sustaining your competitive advantage, but also for your company survival as well. Customer intelligence enables your marketing team to design and apply intelligent promotions or programs to the most suitable customers, through the right channel at the best time. This can help you optimize your customer interaction and improvement of customer experience at higher satisfaction levels.

The information you can use in customer intelligence includes demographics and psychographics, buying behavior on both a micro and macro level. This enables you to make strategic decisions that can maximize your outcome. You can gain customer intelligence by using a customer relationship management system (CRM).

Companies that invest in a CRM can expect a return of $5.60 for every dollar invested, according to a study by Nucleus Research in 2011. The study shows that even second, third, and fourth-generation investments in CRM can yield significant ROI. Plus, organizations that effectively deploy secondary applications, such as mobile, social, marketing optimization and sales analytics can see triple-digit ROI.

Competitor Intelligence

Knowing about your customers is not enough. You must also know what your competitors are doing if you are to sustain a competitive advantage. Competitors can take your customers away from you when you least expect it. When you monitor your competitors’ behaviors, you are better able to anticipate their next move. This not only helps you protect your business, but it can also assist you to win customers from them and improve your market position.

You can keep tabs on your competition by frequently going to your competitors’ websites and reading their press releases. You should also read industry reports. Keeping up with social media can give you an indication of what customers may be thinking and doing with respect to your competitors’ products and services. Networking at trade events and talking with your suppliers can also provide you with valuable information.

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Image Source: Ron Mader